Firm Description Although its roots go back to 1986, Mount Lucas Management, LP (“Mount
Lucas”) was reorganized as a Delaware limited partnership in December of
2010. Its management is unchanged and its ownership is substantially
unchanged from that of its predecessor, Mount Lucas Management
Corporation (the “Corporation”). The Corporation was formed in 1986 to act
as an investment manager to institutional investors and high net worth
individuals. Mount Lucas is registered as an investment adviser with the SEC
under the Investment Advisers Act of 1940, as amended. It is also registered
as a commodity trading advisor and a commodity pool operator under the
U.S. Commodity Exchange Act, as amended; and a member of the U.S.
National Futures Association, a self-regulatory organization authorized by the
U.S. Commodity Futures Trading Commission. The principal address of
Mount Lucas is 405 South State Street, Newtown, Pennsylvania; telephone
(267) 759-3500.
Principal Owners Mount Lucas is managed by its general partner, MLM LLC (the “General
Partner”), a Delaware limited liability company. The Corporation is a principal
owner of Mount Lucas. The principals of the General Partner are Roger E.
Alcaly, Paul R. DeRosa, Raymond E. Ix, Jr., Timothy J. Rudderow Sr., John
R. Oberkofler, and James A. Mehling. Gerald Prior III has been appointed as
the Manager of the General Partner.
Types of Advisory Services We offer clients a range of investment products that include actively managed
strategies and proprietary passive indices. Our long-term tenure in the
investment industry attests to our commitment to diversification, liquidity, risk
management, and transparency.
Mount Lucas offers several distinct investment strategies:
Our global macro strateg
y, MLM Macro-Peak™, combines quantitative
and discretionary trading across the world’s major asset classes.
Our large cap equity strateg
y, MLM Focused Equity™, uses value and
momentum criteria to select S&P 500 stocks.
Our diversified futures index strategy, the
MLM Index™, is both an
investable index and a widely recognized benchmark for managed
futures performance.
Our quantitative liquid alternative strategy, MLM Symmetry , seeks to
capture the investment premiums generated by assuming economic
risks in global markets.
In implementing a particular strategy, Mount Lucas invests in listed or unlisted
equity securities, such as common stock, preferred stock or some convertible
securities, commodities, futures, options, bonds (including rated and unrated
corporate bonds and bonds issued by sovereign governments and their
agencies) and currencies, primarily through exchange-traded, liquid
instruments.
Our strategies differ in terms of their asset class participation, investment
approach, return objective, and risk threshold. Within each strategy, we offer
customized products and programs that directly target the needs and
objectives of our clients. Terms in respect of specific asset classes, limitations
of the types of securities, futures contracts or instruments are specified in the
respective advisory agreement for a managed account client and/or in the
Confidential Offering Memorandum for a particular product managed by
Mount Lucas.
As of December 31, 2018, Mount Lucas had approximately U.S. $1.4 billion of
assets under discretionary management.
Tailored Relationships
Our strategies differ in terms of their asset class participation, investment
approach, return objective, and risk threshold. Within each strategy, we offer
customized products and programs that directly target the needs and
objectives of our clients. Terms in respect of specific asset classes,
limitations of the types of securities, futures contracts or instruments are
specified in the respective advisory agreement for a managed account client
and/or in Confidential Offering Memorandum for a particular product managed
by Mount Lucas.
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Description Mount Lucas charges a management fee that is based on a percentage of
assets under management for a respective client account. For some
products, Mount Lucas also charges a performance fee and/or profit
allocation.
The management fee is generally charged monthly or quarterly in arrears and
ranges from an annual rate of 0.19% to 2.00% of the end-of-month account
value. The performance fee and/or profit allocation, which is accrued monthly
and paid annually, semi-annually or quarterly, is generally equal to an annual
rate of 10% to 25% of the amount by which returns exceed the benchmark
stated in the respective Limited Partnership Agreement, Limited Liability
Company Agreement, Offering Memorandum or Investment Management
Agreement.
A managed account client can generally terminate its advisory contract at any
time. Fees are prorated for cancelled contracts.
Specific fee amounts are negotiated with a respective managed account
client and set forth the respective Investment Management Agreement.
Fees attributable to investment funds managed by Mount Lucas are set forth
in the respective Offering Memorandum, as such may be amended or
supplemented from time to time.
Fees are usually deducted from a designated client account to facilitate
billing. The client must consent in advance to direct debiting of their
investment account. A client may request to be invoiced and billed fees
separately and such arrangement is specified in the respective Investment
Management Agreement.
Please also refer to the “Performance-Based Fees and Side By Side
Management” section of this Firm Brochure.
Other Fee Information
In addition to management and/or performance fees payable to Mount Lucas,
clients will incur and be responsible for paying brokerage fees and
commissions in respect of the broker for the client account. The client is
responsible for selecting its brokerage relationship. Please also refer to the
“Brokerage Practices” section of this Firm Brochure.
Investors in a Fund that is managed or sponsored by Mount Lucas are
charged their pro rata share of brokerage commission, administration fees,
and operating expenses attributable to their investment in a respective Fund.
Such fees and expenses are disclosed in the relevant Fund’s Offering
Memorandum. Please also refer to the “Performance-Based Fees and Side
By Side Management” section of this Firm Brochure.
Mount Lucas, in its sole discretion, may waive or amend its minimum fee
and/or charge different management fees or incentive fee across client
accounts based upon certain criteria (e.g., historical relationship, type of
assets, anticipated future earning capacity, anticipated future additional
assets, dollar amounts of assets to be managed, related accounts, account
composition, negotiations with clients, etc.).
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Performance Fees and/or Allocations Mount Lucas also charges a performance fee and/or allocations for some
products in respect of accounts of “qualified clients” as such term is defined in
Rule 205-3 of the Investment Advisers Act, as amended.
The performance fee or allocation is accrued monthly and paid annually,
semi-annually or quarterly. The performance fee or allocation is generally
between 10% and 25% of the amount by which investment returns exceed
the benchmark stated in the respective Limited Partnership Agreement,
Limited Liability Company Agreement, Offering Memorandum of a Fund
and/or the Investment Management Agreement for a managed account.
Specific performance fee amounts are negotiated with the client and set forth
in the respective Investment Management Agreement, Limited Partnership
Agreement, Limited Liability Company Agreement and/or Offering
Memorandum, as applicable.
Mount Lucas serves as the general partner, manager and/or trading advisor
to: Peak Partners L.P.; Peak Partners Offshore Fund Ltd.; Peak Offshore
Master Fund Ltd.; MLM Symmetry Fund L.P.; MLM Symmetry Master Fund
Ltd.; MLM US Focused Equity Fund, LLC; the MLM Index Fund; the MLM
Managed Futures Fund L.P.; and the Mount Lucas U.S. Focused Equity Fund
(each a “Fund”, collectively, the “Funds”). In such capacity, Mount Lucas
manages the investment of a Fund’s assets.
In the case of Peak Partners, L.P., Mount Lucas is entitled to receive at the
end of each month as compensation for the management services which it
renders to the Fund a management fee equal to 1.50% to 2.00% (annualized)
of the Fund’s assets. The management fee amount will be charged to the
capital account of each limited partner and is payable monthly. In addition to
the management fee, Mount Lucas is entitled to receive an annual incentive
allocation equal to 20% to 25% of each limited partner’s net new profit for that
year. Such fees and/or allocations, which may be waived by Mount Lucas, are
set forth in the Fund’s Offering Memorandum.
In the case of Peak Partners Offshore Fund Ltd., Mount Lucas is entitled to
receive at the end of each month as compensation for the management
services which it renders to the Fund a management fee equal to an annual
rate ranging from of 1.50% to 2.00% of the assets of the Fund. The
management fee amount will be charged to each investor and payable
monthly. In addition to the management fee, Mount Lucas is entitled to
receive an annual incentive fee ranging from 20% to 25% of each
shareholder’s net new profit during a respective year. Such fees, which may
be waived by Mount Lucas, are set forth in the Fund’s Offering Memorandum.
In the case of the MLM Symmetry Fund L.P. (formerly known as the Peak
Commodity Fund L.P.) Mount Lucas is entitled to receive at the end of each
month as compensation for the management services which it renders to
these Funds a management fee equal to an annual rate of 1.50% of the
assets of a respective Fund. The management fee amount will be charged to
each investor and payable monthly. In addition to the management fee,
Mount Lucas is entitled to receive an annual incentive fee/allocation equal to
20% of each investor’s net new profit for that year. Such fees and/or
allocations, which may be waived by Mount Lucas, are set forth in the
respective Offering Memorandum for each Fund.
The Peak Offshore Master Fund Ltd. is a master fund entity for the following
feeder funds: Peak Partners Offshore Fund Ltd. and Peak Partners L.P. The
MLM Symmetry Master Fund Ltd. is a master fund entity for MLM Symmetry
Fund L.P. Mount Lucas receives no additional compensation for investment
management services rendered to the master fund entities.
In the case of the MLM Index Fund, Mount Lucas is entitled to receive at the
end of each calendar month as compensation for the management services
which it renders to the Fund a management fee equal to 1/12th of 1.00% of
the balance of the Class E, net asset value of the Unleveraged Series,
Commodity LS Unleveraged Series, and Commodity LN Unleveraged Series.
In the case of the MLM Managed Futures Fund L.P., Mount Lucas is entitled
to receive at the end of each calendar month as compensation for the
management services which it renders to the Fund a management fee equal
to 1/12th of 0.85%.
In the case of the Mount Lucas U.S. Focused Equity Fund, Mount Lucas is
entitled to receive at the end of each calendar month as compensation for
advisory services which it renders to the Fund a fee equal to 1/12th of 0.75%.
The incentive fee arrangements may create an incentive for Mount Lucas to
make investments that are riskier or more speculative than would be the case
in the absence of an incentive fee or allocation. Mount Lucas, its affiliates,
and its principals are engaged in substantial activities, including managing
assets for multiple clients. The compensation received by Mount Lucas and
its principals from a particular account or entity may differ from the
compensation it receives from another client account. Additionally, sselling
agents receiving continuing compensation from Mount Lucas with respect to
investments sold or introduced by them will have a financial incentive to
encourage clients to maintain their investment with Mount Lucas. However,
notwithstanding any personal interests to the contrary, selling agents are
expected to act in the best interest of their clients.
Mount Lucas, its affiliates and their respective principals will attempt to
resolve such conflicts of interest fairly and in a manner consistent with the
fiduciary duties owed to a respective client.
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Description Mount Lucas provides alternative asset management services and investment
products to institutional investors, pension plans, trusts, mutual funds and
high-net-worth individuals.
Due to the sophisticated and potentially risky nature of the investments
directed by Mount Lucas, the Firm will accept as clients only those persons or
entities with the requisite investment knowledge and financial resources.
An investor in a Mount Lucas-sponsored Fund must be at least an “accredited
investor,” as defined by SEC Regulation D under the Securities Act of 1933,
as amended.
Any client for whom a performance fee and/or allocation is charged must be a
“qualified client” as such term is defined in Rule 205-3 of the Investment
Advisers Act, as amended.
Additionally, certain Mount Lucas Funds require an investor to be a “qualified
purchaser” as defined under Section 2(a)(51)(A) in the Investment Company
Act of 1940.
Clients that seek to establish a managed futures account and investors in
certain Mount Lucas Funds must also be “qualified eligible persons” as
defined under CFTC Regulation 4.7.
Account Size and Investment Minimums The initial account size for a managed account client is negotiated with each
client and set out in the respective Investment Management Agreement.
The Offering Memorandum for a respective Mount Lucas sponsored Fund
specifies the applicable minimum investment requirement.
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Loss Methods of Analysis Mount Lucas employs both quantitative and discretionary methods to drive
returns. The quantitative component of a strategy uses our proprietary trading
models to construct a core portfolio for a client. Our discretionary trading
consists of individual trading ideas, and global risk and exposure
management.
Investment Strategies Mount Lucas believes that diversification and liquidity are essential for the
effective management of risk. These two features are the hallmarks of the
MLM Macro - Peak™ strategy, which primarily trades highly liquid instruments
in the G-7 markets. MLM Macro - Peak™ relies on both quantitative and
discretionary methods to drive returns. The quantitative component of the
strategy uses our proprietary trading models to construct a core portfolio. This
core portfolio is then supplemented through the collaborative, discretionary
trading activity of our principals. By combining quantitative and discretionary
methods, MLM Macro - Peak™ seeks to anticipate and capture returns in a
wide range of markets and economic environments. MLM Macro - Peak™
primarily derives its profits from medium-to-longer-term price movements, and
is thereby designed for investors with a minimum 3 – 5 year time horizon.
Our quantitative models are a mix of long-only value and momentum
strategies in equities, along with yield-curve models and trend following in
global fixed income, currencies, and commodities. Our discretionary trading
consists of individual trading ideas, and global risk and exposure
management. Our principals apply a top-down, macro viewpoint in developing
their trading ideas.
MLM Symmetry™ represents the current combination of quantitative
strategies utilized in the MLM Macro - Peak™ strategy, which for the last 27
years have been continuously developed and enhanced using academic
research and the extensive investment experience of the Mount Lucas
principals.
MLM Symmetry™ categorizes asset classes based on the two types of broad
financial risk premium: investment risk premium and price risk premium. The
investment risk premium funds economic activity by investing in equity and
credit securities from the long side, directing capital to those who seek to
expand and transfer capital risk. The price risk premium takes on exogenous
input and output cost risk in commodity prices, currency movements and
interest rates, facilitating hedging that allows business more certainty in
operations, allowing them to focus on their core expertise. Crucially, it does
this from both sides of the market, trend following long and short. Combining
these risk premia is very attractive, as one side thrives on stability and
generally rising growth, while the other thrives in times of instability. Risk is
allocated in equal proportions to each of these uncorrelated components,
creating a portfolio with a superior risk-adjusted return.
The asset allocation within the investment risk and price risk categories is
broadly diversified between asset classes and investment styles (i.e. value,
momentum, trend following). MLM Symmetry™ employs multiple quantitative
investment models built around the concept of capturing an augmented risk
premium in each asset class using a “bottom up” approach.
MLM US Focused Equity™ is an S&P 500-based strategy that uses a
proprietary, quantitative stock-picking algorithm developed by the firm's
principals. Mount Lucas launched this strategy in March 2000. The strategy
selects deep value and high momentum stocks. The strategy holds all stock
selections for a year, as we believe length of holding period is important. The
portfolio is constructed by selecting a basket of 10 value and 10 momentum
stocks, twice per year. At each selection interval the model ranks S&P 500
stocks (excluding utilities, ADRs, and all stocks not passing a basic earnings
test) based on predetermined value criteria and selects the top 10. Next, the
model ranks the same universe based on specific momentum criteria and
again selects the top 10.
The model then invests 80 percent of the capital into equally sized positions
of the 10 value stocks, and allocates the remaining 20 percent into equally
sized positions of the 10 momentum stocks. The positions are then held for
one year. Six months later, the process is repeated, and the model selects
another 10 value and 10 momentum stocks that are also held for one year,
creating a "laddered" portfolio of up to 40 stocks. It is possible for a stock to
appear in both the value and momentum portfolios during selection, and it is
also possible to select the same value (or momentum) stock during
consecutive six-month selection intervals. Thus, while as many as 40 unique
stocks may appear in the portfolio (10 value, 10 momentum, twice per year)
at any given time, the portfolio is often comprised of fewer equity listings as a
result of these overlaps. After a stock is held for one year it is sold if it is not
again ranked among the top 10 value or momentum stocks.
The MLM Index™ is a diversified portfolio of 22 liquid futures contracts traded
on U.S. and foreign exchanges. Sectors traded include commodities,
currencies and global fixed income. The MLM Index™ can be used in two
ways:
As a Diversified Investment: The MLM Index™ is a passive,
investable index that is non-correlated with traditional investments,
providing investors with the opportunity for portfolio diversification.
As a Benchmark: The MLM Index™ is a widely recognized, patented
benchmark for evaluating futures investments that are actively
managed.
Returns in commodities, currencies and global fixed income are derived
during periodic bursts of price volatility, when hedgers desire to transfer price
risk to investors. These periods of volatility create opportunities for profit, as
investors assume risk that hedgers wish to avoid. The MLM Index™ is a
proprietary model that attempts to capture investment returns by taking on
these price risks. The MLM Index™ is also a world-renowned metric for
calculating the innate, passive return that is contained in these markets. The
MLM Index™ trades a total of 22 futures contracts: 11 commodity, 6 currency
and 5 global fixed incomes. Each of the 3 sub-baskets in the Index
(commodities, currencies, global fixed income) is weighted by its relative
historical volatility. Markets within each sub-basket are equally weighted. The
MLM Index™ can take long or short positions in any of its 22 markets.
Risk of Loss
All of our investment programs have certain risks that are borne by the
investor, including the potential risk of a total loss. While our investment
approach constantly seeks to keep the risk of loss in mind, the risks that
investors face by investing with Mount Lucas include, without limitation, the
following:
Market Risk: The price of a security, bond, or commodity interest may
drop in reaction to tangible and intangible events and conditions. This
type of risk is caused by external factors independent of a security’s or
other contract’s particular underlying circumstances. For example,
political, economic and social conditions may trigger market events.
Inflation Risk: When any type of inflation is present, a dollar today will
not buy as much as a dollar next year, because purchasing power is
eroding at the rate of inflation.
Currency Risk: Overseas investments are subject to fluctuations in the
value of the dollar against the currency of the investment’s originating
country. This is also referred to as exchange rate risk.
Reinvestment Risk: This is the risk that future proceeds from
investments may have to be reinvested at a potentially lower rate of
return (i.e. interest rate). This primarily relates to fixed income
securities.
Business Risk: These risks are associated with investing in a particular
industry or a particular company within an industry. For example, oil-
drilling companies depend on finding oil and then refining it, a lengthy
process, before they can generate a profit. They carry a higher risk of
profitability than an electric company, which generates its income from
a steady stream of customers who buy electricity no matter what the
economic environment is like.
Financial Difficulties of Institutions and Custodians. There is the
possibility that institutions, including brokerage firms and banks, with
which the Mount Lucas and/or client does business, or to which
securities have been entrusted for custodial purposes, will encounter
financial difficulties
Liquidity Risk: Liquidity is the ability to readily convert an investment
into cash. Generally, assets are more liquid if many traders are
interested in a standardized product. For example, U.S. Treasury Bills
are highly liquid, while real estate properties are not. In extraordinary
circumstances, such as the U.S. stock market break in October 1987
or the global financial crises of 1998 and 2008, the liquidity of some
trading instruments may be impaired and pricing mechanisms may not
function properly
Additionally, the Offering Memorandum for a respective Fund managed by
Mount Lucas provides more detailed disclosures of risks of investment
applicable to that Fund.
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Mount Lucas is also registered with the U.S. Commodity Futures Trading
Commission as a Commodity Trading Advisor and a Commodity Pool
Operator under the U.S. Commodity Exchange Act, as amended. It is a
member of the U.S. National Futures Association in such capacities.
Affiliations Mount Lucas does not have any other arrangements that are material to its
advisory business or its clients with a related person who is a broker-dealer,
investment company, other investment advisor, financial planning firm,
commodity pool operator, commodity trading adviser or futures commission
merchant, banking or thrift institution, accounting firm, law firm, insurance
company or agency, pension consultant, real estate broker or dealer, or an
entity that creates or packages limited partnerships.
11. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Code of Ethics Mount Lucas has adopted an Ethics Code which requires that its employees
at all times act in the best interests of the Firm’s clients and maintain the
highest standards of professional and ethical conduct. All employees of the
Firm must also act in compliance with the federal securities laws of the United
States, including without limitation the anti-fraud provisions of Section 206 of
the Advisers Act and the Section 4(b) of the Commodity Exchange Act.
Our Code of Ethics is available for review by clients and prospective clients
and the firm will provide a copy of the Ethics Code to any client or prospective
client upon request.
Participation or Interest in Client Transactions
As a matter of policy, Mount Lucas does not trade for its own account.
Personal Trading
All of the executive officers, directors, employees, and consultants who have
been designated by Mount Lucas are deemed to be “Reporting Persons” in
respect of their personal investments. As such, they are subject to the
reporting requirements, trading restrictions and prohibitions and the related
procedures established with respect to personal trading and investment
accounts that have been adopted by Mount Lucas.
Mount Lucas has established and maintains a restricted list of securities (the
“Restricted List”). The Restricted List contains securities or issuers of
securities with which the Firm is involved.
All personal investment activity must be reported to the Chief Compliance
Officer of Mount Lucas. Reporting Persons are also responsible pursuant to
the Ethics Code for periodically disclosing their securities holdings and
transactions and providing such designated officers at Mount Lucas with
duplicate monthly brokerage statements directly from the relevant brokers.
The restrictions on trading and investing applicable to a respective employee
of the Firm also apply to family member accounts subject to the control of a
Reporting Person and to such accounts in which a Reporting Person or family
member has any beneficial interest. In no circumstances may a Reporting
Person or a family member “trade ahead” of an order for a client account in
connection with any investment transaction
Our Firm’s Personal Trading Policy is available for review by clients and
prospective clients and Mount Lucas will provide a copy of the Personal
Trading Policy to any client or prospective client upon request.
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Selecting Brokerage Firms Managed account clients are responsible for selecting the broker for their
account.
Mount Lucas does not have any affiliation with any brokerage or product
sales firms. Specific brokerage or custodial recommendations will be made to
Clients upon request based on their need for such services. Mount Lucas will
select brokers utilized for the Funds it sponsors or manages.
Pursuant to its “best execution” responsibilities, Mount Lucas will execute
transactions in such a manner that the total cost or proceeds to the client in
each transaction is most favorable under the circumstances. Consistent with
the principle of best price and execution, Mount Lucas will generally seek
reasonably competitive rates, but will not necessarily pay the lowest rate on
each transaction. In seeking best execution, Mount Lucas will consider the full
range of a broker’s services, commission rates, financial responsibility and
responsiveness. Mount Lucas will periodically and systematically evaluate the
performance of the brokers it utilizes for Funds it manages and/or that
maintain client assets.
Soft Dollars
Where an advisor agrees to pay more than the lowest available commission
to a broker in exchange for research products and services, the payments
and arrangements are referred to as “soft dollars”. Mount Lucas does not
enter into soft dollar arrangements.
Order Aggregation Mount Lucas may from time to time combine orders that are for more than
one client’s account. For example, clients whose accounts are being traded
pursuant to the same trading strategy will have orders placed for their
accounts at or about the same time, at least where those clients are trading
through the same executing broker. Orders for accounts that are being traded
pursuant to different strategies may be combined if they are the same in all
respects other than quantity. This might occur where two different strategies
call for the execution of market-on-close orders in the same contract.
Combining orders is permissible as long as Mount Lucas has established a
predetermined and non-preferential mechanism for allocating any resulting
“fills” (i.e., executed orders) among the accounts in the combined (or “block”)
order. Such a procedure is necessary in order to address the potential for
unfairness that can result if the order is not filled completely or if the broker
reports back a “split fill” (i.e., the execution of the order at more than one
price). The procedure employed by Mount Lucas allocates split fills in a
manner that attempts to achieve the closest possible “average price” across
all accounts (the average price is defined as the sum of all fill prices times the
number of contracts in each fill, divided by the total number of contracts).
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Periodic Reviews
Mount Lucas conducts reviews of client accounts on a weekly basis. The
review is conducted by Timothy J. Rudderow Sr, the CEO and CIO of Mount
Lucas. The review is conducted to ensure the accounts are being traded
pursuant to the relevant investment strategy and that trades were processed
as instructed by the Firm.
Other Reviews
Other conditions that may trigger an account review are: a change in the tax
laws; new investment information is received or identified; a change or
modification to an investment strategy; an event in a respective market and/or
changes in a client's own situation.
Regular Reports
Mount Lucas distributes written reports to clients with respect to their
separate accounts on a monthly basis or as provided in a respective client
agreement. Each report reviews the account’s performance for the preceding
month and for the year-to-date.
The books of: Peak Partners L.P.; Peak Partners Offshore Fund Ltd.; Peak
Offshore Master Fund Ltd.; MLM Symmetry Fund L.P.; MLM Symmetry
Master Fund Ltd.; MLM US Focused Equity Fund, LLC; the MLM Index Fund;
and the MLM Managed Futures Fund L.P. (collectively, the “Funds”) are
audited annually by independent certified public accountants. Each Fund will
use its best efforts to cause investors to receive: (i) monthly financial reports;
(ii) reports required by any other governmental authority which has jurisdiction
over the activities of the Fund; (iii) relevant tax reporting information within 90
days after the end of each fiscal year; and (iv) annual audit reports of the
Fund within 120 days after the end of fiscal year.
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Mount Lucas contracts with independent parties that maintain the appropriate
licenses in respect of providing client referrals. Any payments made by Mount
Lucas for client solicitations are made in accordance with Rule 206(4)-3.
Other Compensation
Mount Lucas does not receive or accept referral fees or any form of
remuneration from other professionals when a prospect or client is referred to
us.
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As General Partner of certain Funds, Mount Lucas is deemed to hold cash or
securities for, or on behalf of, client accounts. However, all Client assets are
maintained with third party qualified custodians. Managed account clients
receive account statements directly from the respective qualified custodians
on at least a quarterly basis.
The Funds sponsored by Mount Lucas rely on the "audit exemption" under
the SEC Custody Rules in that audited financial statements for these entities
are prepared by an independent public accounting firm that is subject to
regular inspection by the Public Company Accounting Oversight Board and
are distributed to investors within 120 days after the end of a Fund’s fiscal
year.
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Discretionary Authority for Trading Mount Lucas accepts discretionary authority to manage securities and futures
accounts on behalf of clients. Mount Lucas executes Investment Management
Agreements with clients. The Investment Management Agreement provides
Mount Lucas with a limited power of attorney and trading authorization. The
Investment Management Agreement will describe the firm’s authority to
determine, without obtaining specific client consent, the securities, futures or
other instruments to be bought or sold and the relevant investment strategy to
be utilized by Mount Lucas for the client account.
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Proxy Voting
In the absence of specific voting guidelines received from a client or
requirements set forth in a respective Investment Management Agreement,
Mount Lucas will vote proxies in a manner that it deems to be in the best
interest of the client. This principle may result in different voting results for
proxies for the same issuer. The Firm shall consider only those factors that
relate to the client's investment or are dictated by the client’s written
instructions, including how its vote will economically impact and affect the
value of the client's investment (keeping in mind that, after conducting an
appropriate cost-benefit analysis, not voting at all may be in the best interest
of the client).
Mount Lucas has adopted and maintains written Proxy Voting Policies and
Procedures. The firm’s Proxy Voting Policies and Procedures are available for
review by clients and prospective clients and the firm will provide a copy to
any client or prospective client upon request.
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Financial Condition A balance sheet is not required to be provided because Mount Lucas does
not require prepayment of fees of more than $1,200 per client, six months or
more in advance.
19. Business Continuity Plan General Mount Lucas has adopted a Business Continuity and Disaster Recovery Plan
that provides detailed steps to mitigate and recover from the loss of office
space, communications, services or key people in the event of natural
disasters (such as hurricanes, tornados, and flooding) as well as other man-
made significant business disruptions (e.g. loss of electrical power, fire, bomb
threat, nuclear emergency). The Business Continuity and Disaster Recovery
Plan is distributed to all employees and is tested on a periodic basis.
20. Privacy Policy Privacy Policy Notice The privacy of the clients of Mount Lucas is a matter of the utmost concern.
The firm’s activities are governed by Regulation S-P, adopted by the SEC
pursuant to the Gramm-Leach-Bliley Act of 1999, which is designed to
maintain the privacy of non-public information about individuals.
Mount Lucas gathers non-public personally identifying information: i) on
applications and forms; and ii) about transactions involving Mount Lucas or
the funds it manages. Mount Lucas does not share any such information
about current or former investors who are natural persons with any non-
affiliated third parties except to the extent required to service the client
account or specifically permitted by law or is reasonably necessary to prevent
fraud, unauthorized transactions or liability.
Furthermore, Mount Lucas does not share personally identifying information
with all employees. The firm limits disclosures to those employees who have
a legitimate business need for the information.
On occasion, laws and regulations may require disclosure of client
information to government agencies and regulators. In addition, federal and
state laws permit persons involved in litigation to obtain certain records.
Mount Lucas shares only the information it is required or authorized to share.
If a subpoena or other request compelling Mount Lucas to produce
information is served on Mount Lucas, it should be brought to the attention of
the Chief Compliance Officer.
Mount Lucas has instituted physical, electronic and procedural safeguards
which protect personally identifying information from disclosure and comply
with federal standards.
This privacy policy shall be provided to individual investors when their
accounts are opened and thereafter once in each calendar year.
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